National economic forecast

Emily N. Saarela

The current economic outlook for the nation is clear and promising.
According to recent studies by Standard & Poor's, the economy is "in great
shape and likely to remain so for the next few quarters." In his weekly
journal, Trends & Projections, David M. Blitzer, vice president and chief
economist of Standard & Poor's, foresees economic growth at 2 to 3 percent,
inflation at 3 percent or less and unemployment around 5 percent through
the end of 1997 and into 1998.

Table 1 (below) describes annualized growth percentages of the economy from
early 1990 through mid-1995, and mid-1995 through mid-1997. The gross
domestic product (GDP) has grown at an annual rate of 3.6 percent for the 8
quarters ending with the second quarter of 1997. Accelerated growth from
1990 through mid-1995 is apparent throughout the economy,
except--thankfully--in unemployment.

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In March, the U.S. Department of Labor's Bureau of Labor Statistics (BLS)
reported that all four U.S. regions, as well as seven of the nine
divisions, experienced small declines in their unemployment rates from 1995
to 1996. During that period, the national unemployment rate crept down from
5.6 percent to 5.4 percent. Today's figures linger around 5 percent.
Standard and Poor's records July's unemployment rate at 4.8 percent.
Furthermore, BLS projects the labor force to increase by 16 million over
the 1994 to 2005 period, from 131 million to 147 million. This 12-percent
increase is less than the 16-percent increase experienced between the
previous 11-year period of 1982 to 1993.

Economic indicators (see Table 2, left) show personal income to be on the
rise. In fact, 1997 estimates predict a 5.8-percent change over 1996
figures and an additional 5.0-percent change for 1998. Disposable personal
income is projected to round off at $5,879.9 billion for 1997, a 5.3-percent increase over 1996.Figures for 1997 housing starts are slightly belo
w those of 1996. According to the U.S. Census Bureau, during the first
seven months of 1997, 841,600 housing units were started compared with
868,500 units for the same period of 1996, a decrease of 3 (+-1) percent.

The country's inflation situation is good. Standard & Poor's credits
several reasons: falling oil prices, the strong U.S. dollar, U.S.
industrial trading partners being mired in a recession and more people
investing in stocks. However, Blitzer writes, "The good news will not last
forever. When economies in Europe and Japan finally do begin to grow, price
pressures could return with renewed vigor."

Sources: Trends & Projections, July 17, 1997, and August 14, 1997; U.S.
Department of Labor's Bureau of Labor Statistics; U.S. Census Bureau.